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Thursday, March 10, 2016

The Poverty Lottery

The odds of striking it rich by playing the Powerball are 1
in 292 million — worse than the odds of being struck by lightning — yet that
doesn’t stop us from daydreaming about winning.

Just what are your chances of falling into poverty?
Sociologists Thomas Hirschl of Cornell University and Mark Rank of Washington
University have calculated how likely you are to become poor based solely on
your age, education, race and marital status.

More than half of Americans experience poverty at some point
during their prime working years, the authors discovered. The risk can be as
high as 76 percent for some Americans and as low as 5 percent for others. But a
common theme that emerged in the author’s research was that the risk of
becoming poor is often higher than Americans of any demographic group realize.

Sociologists Thomas Hirschl of Cornell University and Mark
Rank of Washington University have calculated how likely you are to become poor
based solely on your age, education, race and marital status. The calculator
predicts probabilities for five, 10 and 15 years in the future. Now
probabilities aren't predictions. Their calculator doesn't ask about your
income, your savings and debt and how well your 401(k) is performing -- or if
you even have one. Certainly, those factors influence how well individuals can
weather unexpected life events, such as illness or unemployment. But in the
aggregate, Hirschl said, the four criteria used in the calculator are the
strongest predictors of economic distress. Hirschl and Rank analyzed more than
40 years of income data for 5,000 households and interviewed dozens of
Americans for their book, "Chasing the American Dream. Technically, the
researchers are calculating the risk of being not just at poverty, but also
near poverty, which they define as income that's up to 50 percent above the
official poverty level. By that measure, more than half of Americans experience
poverty at some point during their prime working years, the authors discovered.